The Economist: Pilot Pay Rising
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The Economist: Pilot Pay Rising
FYI
A crunch in the cockpit
May 10th 2001
From The Economist print edition
As airline profits fall, pilots’ pay is rising
PASSENGERS beware: pilots are angry. On May 9th German travellers faced a second strike in a week at Lufthansa, after pilots walked out of pay talks yet again. Meanwhile, Americans are braced for another awful summer as pay negotiations start at the country’s largest carrier, American Airlines. These could be rough: AA’s management remains hardline, even though its pilots have seen colleagues at other airlines, starting with United last autumn, winning bumper rises of around 45%. The United dispute, in which pilots opted for a “sick-out” rather than an outright strike, disrupted holiday travel across America.
The effects are still being felt. Pilots at Comair, a regional subsidiary of Delta Air Lines, who have been on strike since late March, are about to vote on a pay offer. Their colleagues at the parent company will vote in June on a deal offering rises of 23-39% over four years, which would push a senior captain’s salary over $300,000. Lufthansa’s pilots are looking for similar rises, of 30-35% over four years, but the management’s latest offer was only 18%. A strike could cost Lufthansa upwards of euro25m ($22.5m) a day, so pressure to settle is high. Few airlines could survive being grounded for more than six weeks.
Big pay rises for pilots encourage others to aim high. This week, Northwest agreed to give its mechanics an immediate 24% rise, with more to come. Labour already accounts for 36% of an average airline’s operating expenses. Airlines fear being squeezed just as profits fall after several healthy years. The seven largest American airlines lost a combined $701m in the first quarter of this year, compared with profits of $128m a year ago. Only Southwest and Continental stayed in profit and, as it happens, free of labour troubles. Lufthansa’s first-quarter profit collapsed to euro5m, from euro99m last year.
Underpinning all this is a worldwide pilot shortage, in an industry growing by 5% a year. On the supply side, the main problem is shrinking air forces. America’s military used to provide up to 80% of trainee civil pilots; it now accounts for half. Boeing forecasts that the number of airliners in service will double to around 32,000 over the next 20 years, and that severe pilot shortages will occur by 2005. EasyJet, a fast-growing low-fare carrier based in Britain, is scouring the world for pilots, offering sign-on fees of £30,000 ($43,000). America is considering raising the retirement age for pilots from 60 to 63, following similar moves in Europe. As bleak as this sounds, though, a shortage of pilots could be exactly what the airline industry needs to cure its other headache: congestion
A crunch in the cockpit
May 10th 2001
From The Economist print edition
As airline profits fall, pilots’ pay is rising
PASSENGERS beware: pilots are angry. On May 9th German travellers faced a second strike in a week at Lufthansa, after pilots walked out of pay talks yet again. Meanwhile, Americans are braced for another awful summer as pay negotiations start at the country’s largest carrier, American Airlines. These could be rough: AA’s management remains hardline, even though its pilots have seen colleagues at other airlines, starting with United last autumn, winning bumper rises of around 45%. The United dispute, in which pilots opted for a “sick-out” rather than an outright strike, disrupted holiday travel across America.
The effects are still being felt. Pilots at Comair, a regional subsidiary of Delta Air Lines, who have been on strike since late March, are about to vote on a pay offer. Their colleagues at the parent company will vote in June on a deal offering rises of 23-39% over four years, which would push a senior captain’s salary over $300,000. Lufthansa’s pilots are looking for similar rises, of 30-35% over four years, but the management’s latest offer was only 18%. A strike could cost Lufthansa upwards of euro25m ($22.5m) a day, so pressure to settle is high. Few airlines could survive being grounded for more than six weeks.
Big pay rises for pilots encourage others to aim high. This week, Northwest agreed to give its mechanics an immediate 24% rise, with more to come. Labour already accounts for 36% of an average airline’s operating expenses. Airlines fear being squeezed just as profits fall after several healthy years. The seven largest American airlines lost a combined $701m in the first quarter of this year, compared with profits of $128m a year ago. Only Southwest and Continental stayed in profit and, as it happens, free of labour troubles. Lufthansa’s first-quarter profit collapsed to euro5m, from euro99m last year.
Underpinning all this is a worldwide pilot shortage, in an industry growing by 5% a year. On the supply side, the main problem is shrinking air forces. America’s military used to provide up to 80% of trainee civil pilots; it now accounts for half. Boeing forecasts that the number of airliners in service will double to around 32,000 over the next 20 years, and that severe pilot shortages will occur by 2005. EasyJet, a fast-growing low-fare carrier based in Britain, is scouring the world for pilots, offering sign-on fees of £30,000 ($43,000). America is considering raising the retirement age for pilots from 60 to 63, following similar moves in Europe. As bleak as this sounds, though, a shortage of pilots could be exactly what the airline industry needs to cure its other headache: congestion
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I'd like to see an article that reports the real reasons behind what appears to be a rash of claims - worldwide - by pilots....reasons, such as an erosion of our working conditions that were taken without consultation, when there was a pilot surplus. Reasons, such as the RESTRAINT in claims, urged by the companies, and exercised by pilots' representative bodies over the past decade, which saw a DECLINE in real terms, of our incomes, on the promise that "better things are in store for you!".
As an ex-dispute Australian pilot, I witnessed Australia's major airline companies voluntarily offer the strike-breakers 2 1/2 times the MORE salary than our union presented in an AMBIT claim....and those grossly inflated [to my thinking] wages have continued to be paid for over 13 years.
Blame Rupert Murdoch, Bob Hawke, or Frank Lorenzo - individually or collectively. They have demonstrated to pilots what our TRUE worth is, by their "confrontation and reward mentality". The difference between the "strike-breaker" salaries paid then, and those being realized now, is that there is an increase in productivity achieved through mutually negotiated agreements. The stopworks/strikes are intended only to speed up discussions, and to test the degree of commitment of each side.
As an ex-dispute Australian pilot, I witnessed Australia's major airline companies voluntarily offer the strike-breakers 2 1/2 times the MORE salary than our union presented in an AMBIT claim....and those grossly inflated [to my thinking] wages have continued to be paid for over 13 years.
Blame Rupert Murdoch, Bob Hawke, or Frank Lorenzo - individually or collectively. They have demonstrated to pilots what our TRUE worth is, by their "confrontation and reward mentality". The difference between the "strike-breaker" salaries paid then, and those being realized now, is that there is an increase in productivity achieved through mutually negotiated agreements. The stopworks/strikes are intended only to speed up discussions, and to test the degree of commitment of each side.
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At least (or at last) You Splitter realises that airlines need pilots. Can't operate for even one day without them. we are a commodity like airframes and fuel, you just have to pay the market rate.
In my 20 years plus of airline flying the lifestyle has never been worse. This is the downside of being a commodity in short supply.
You Splitter ought to learn to be nice to those on whom he depends for his employment.
In my 20 years plus of airline flying the lifestyle has never been worse. This is the downside of being a commodity in short supply.
You Splitter ought to learn to be nice to those on whom he depends for his employment.
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You Splitter
Airlines do not go bust because of Pilot wages, they go bust for inept management and rising fuel costs.
Bean Counters love blaming Pilots, we have more fun, earn more money, get to play with our favourite toy and the male members of our fraternity mostly get to work with gorgeous young ladies - A tough life!
I took flying as a job, other people can do the same.
Airlines do not go bust because of Pilot wages, they go bust for inept management and rising fuel costs.
Bean Counters love blaming Pilots, we have more fun, earn more money, get to play with our favourite toy and the male members of our fraternity mostly get to work with gorgeous young ladies - A tough life!
I took flying as a job, other people can do the same.
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Yak Hunt - airlines (as with all companies) go bust when expenses exceed income.
Economics 101.
Increase fares to cover higher overheads - as suggested by zzz and fewer pax will fly. Fewer pax; less revenue. Less revenue and higher costs = bust airline (see above).
Alternatively, if costs (ie pilot salaries) are to be increased substantially whilst revenues are down cuts will have to be made in other areas - or alternatively said pilots will have to work much harder. Like 100 hours per month, instead of the current industry average of just over 50. Of course, the downside of this is that there will be considerably more crew fatigue and that will have a serious adverse affect on safety.
As I've said before on other threads, it's better all round to go for profit share - that way when things are good you benefit; when they are bad costs are controlled. It makes sense ... after all, do you guys really want to be the highest former earners in the dole office?
That said, I agree with Kaptin M - trust (and team effort) is a two way street and when management unilaterally start to erode conditions, that's not on either.
Economics 101.
Increase fares to cover higher overheads - as suggested by zzz and fewer pax will fly. Fewer pax; less revenue. Less revenue and higher costs = bust airline (see above).
Alternatively, if costs (ie pilot salaries) are to be increased substantially whilst revenues are down cuts will have to be made in other areas - or alternatively said pilots will have to work much harder. Like 100 hours per month, instead of the current industry average of just over 50. Of course, the downside of this is that there will be considerably more crew fatigue and that will have a serious adverse affect on safety.
As I've said before on other threads, it's better all round to go for profit share - that way when things are good you benefit; when they are bad costs are controlled. It makes sense ... after all, do you guys really want to be the highest former earners in the dole office?
That said, I agree with Kaptin M - trust (and team effort) is a two way street and when management unilaterally start to erode conditions, that's not on either.
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I wonder how many people are prepared to put their hand on their heart and actually give a figure as to what they believe they are truly worth.
One of the ironies of our profession is that Pilots want more and more money yet we still complain about the working practices. For example 5 on the trot night tenerife's don't get any more palatable just because you're giving me another £10,000 a year to do it!!!
Of course supply and demand is important but that does not mean that every pilot in the country should be paid £150,000 a year just because an airline can afford it.
Some airlines, like BA appear to be a career for some pilots, they join and stay there until they retire. Other airlines are stepping stones into BA or Virgin or whoever. Is it always the salary that makes people leave the charter airlines for BA etc. Looking at the BALPA pay cales, i would say not.
We work hard at getting our licenses and we run the risk every day of losing it. We have a responsibility to the travelling public. We should be compensated for that. As to the actual amount that we should be compensated, its a difficult one to answer.
I think we should work hard on improving the lifestyle issues. BTW if this chap is convicted of manslaughter because he allegedly fell asleep at the wheel of his range rover before piling on to a railway line, will your company provide you with a place of rest after an all night flight before you drive home to your mansion in Sussex. Me thinks not.
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Big Johnson Casinos "Liquor up front Poker in the rear"
One of the ironies of our profession is that Pilots want more and more money yet we still complain about the working practices. For example 5 on the trot night tenerife's don't get any more palatable just because you're giving me another £10,000 a year to do it!!!
Of course supply and demand is important but that does not mean that every pilot in the country should be paid £150,000 a year just because an airline can afford it.
Some airlines, like BA appear to be a career for some pilots, they join and stay there until they retire. Other airlines are stepping stones into BA or Virgin or whoever. Is it always the salary that makes people leave the charter airlines for BA etc. Looking at the BALPA pay cales, i would say not.
We work hard at getting our licenses and we run the risk every day of losing it. We have a responsibility to the travelling public. We should be compensated for that. As to the actual amount that we should be compensated, its a difficult one to answer.
I think we should work hard on improving the lifestyle issues. BTW if this chap is convicted of manslaughter because he allegedly fell asleep at the wheel of his range rover before piling on to a railway line, will your company provide you with a place of rest after an all night flight before you drive home to your mansion in Sussex. Me thinks not.
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Big Johnson Casinos "Liquor up front Poker in the rear"
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This is a profession like no other. It costs an absolute fortune to obtain a licence. University students are moaning about going into debt to the tune of 2 or 3 grand but they can't even comprehend the costs we're talking about. The pay should reflect this and the risk factor that one takes just in embarking on obtaining a licence.
Thereafter, as the comments from above, the responsibility, the nights away, the hassle from sim checks to medicals, to SEPs, to CRMs, to fire/smoke and the bloody rest. Yes we're worth a lot and we should be living it right up. Life's short and you've got to make the most of it, there's no time like the present to make them all realise - WE (flight crew) ARE SO VERY SPECIAL!!!
Thereafter, as the comments from above, the responsibility, the nights away, the hassle from sim checks to medicals, to SEPs, to CRMs, to fire/smoke and the bloody rest. Yes we're worth a lot and we should be living it right up. Life's short and you've got to make the most of it, there's no time like the present to make them all realise - WE (flight crew) ARE SO VERY SPECIAL!!!
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A friend of mine once described a pilot as "the premium on a very expensive insurance policy". Next time you are in the position to, check what the insurance is that your company are carrying. If I screw up, the premium will rise (double perhaps?) on third party insurance of 300 MILLION POUNDS. That, and the responsibility for a whole lot of lives, is what I'm worth.
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Interesting that the Guvnor is back to his pilot bashing, albeit a little toned down now.
"said pilots will have to work much harder. Like 100 hours per month, instead of the current industry average of just over 50."
Where did this 50hours per month come from? For a man who has claimed 4000hours as a commander on B707 and DC8 aircraft I would have thought you would have a little better knowledge of the working structure of a pilot's life! The job isn't just "wheels-off to wheels-on" matey!
"said pilots will have to work much harder. Like 100 hours per month, instead of the current industry average of just over 50."
Where did this 50hours per month come from? For a man who has claimed 4000hours as a commander on B707 and DC8 aircraft I would have thought you would have a little better knowledge of the working structure of a pilot's life! The job isn't just "wheels-off to wheels-on" matey!
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I am a university graduate. I was sponsored by a UK Blue chip company. I was skint for 4 years - leaving with 'average' debts of about £3,000 in 1993. I worked for that company for 12 months after graduating. I paid about £40,000 for my ab-initio ATPL. (Borrowed. Repayment of approx. £360 per month for ten years.)
The average decent 3/4 bedroom semi-detatched house in Hertfordshire costs about £200k. NOTHING FANCY - Just your average place. (Mortgage payment of £1,500 per month.)
I am still 'struggling' to pay the bloody loan off with a mortgage, car loans etc...
Most of my peers now earn about £35k - £80k (who are also my age - 31). They get a company car. (Car loans = £300 per month over 5 years. Tax & Insurance = £60 per month) They get free petrol (£170 per month). They get WEEKENDS !!!
It is easy for those not in the know to say that we earn enough. I can tell you that once you have given up your job for a year to do the training, waited a year to get a job (possibly less, possibly more) - All whilst on no income and paying all the bills is a feat on its own worth a 'special bonus' of about £100k. Oh yes and I forgot, that of course you have to be good enough to pass all the tests too. (We all know lots of people that didn't)
Then when you do get your first 'crappy' flying job you are supposed to be grateful and pay to get yourself type-rated !!!
So roughly adding up the 'basic costs' that's about £2400 per month (IGNORING HOUSEHOLD BILLS) that your average pilot has to pay.
To pay these basic living costs we need to earn approx £3420 per month. Which is £41,000k pa. That figure is based on ZERO DISPOSABLE INCOME INCLUDING NO HOUSEHOLD BILLS / COUNCIL TAX ETC !!!!
I would suggest that a disposable income of about £600 per month (i.e. £20 per day - to pay for our crew food ( - that was a joke BTW)) would seem reasonable - so if we add that on to the £2,400 needed to 'survive' we really need to be taking home about £3,000 per month to be 'comfortable' and to pay the bills. That means we need to earn (before tax and insurance) £4,285 per month
So how much are we worth then .....?
Well at least £51,400 for the first ten years of our careers JUST to pay back our debts and survive.
I think that if senior captains in the US are getting £200,000 then I don't see why we should be so different. Put the fares up for gods sake. People WILL still fly.
The average decent 3/4 bedroom semi-detatched house in Hertfordshire costs about £200k. NOTHING FANCY - Just your average place. (Mortgage payment of £1,500 per month.)
I am still 'struggling' to pay the bloody loan off with a mortgage, car loans etc...
Most of my peers now earn about £35k - £80k (who are also my age - 31). They get a company car. (Car loans = £300 per month over 5 years. Tax & Insurance = £60 per month) They get free petrol (£170 per month). They get WEEKENDS !!!
It is easy for those not in the know to say that we earn enough. I can tell you that once you have given up your job for a year to do the training, waited a year to get a job (possibly less, possibly more) - All whilst on no income and paying all the bills is a feat on its own worth a 'special bonus' of about £100k. Oh yes and I forgot, that of course you have to be good enough to pass all the tests too. (We all know lots of people that didn't)
Then when you do get your first 'crappy' flying job you are supposed to be grateful and pay to get yourself type-rated !!!
So roughly adding up the 'basic costs' that's about £2400 per month (IGNORING HOUSEHOLD BILLS) that your average pilot has to pay.
To pay these basic living costs we need to earn approx £3420 per month. Which is £41,000k pa. That figure is based on ZERO DISPOSABLE INCOME INCLUDING NO HOUSEHOLD BILLS / COUNCIL TAX ETC !!!!
I would suggest that a disposable income of about £600 per month (i.e. £20 per day - to pay for our crew food ( - that was a joke BTW)) would seem reasonable - so if we add that on to the £2,400 needed to 'survive' we really need to be taking home about £3,000 per month to be 'comfortable' and to pay the bills. That means we need to earn (before tax and insurance) £4,285 per month
So how much are we worth then .....?
Well at least £51,400 for the first ten years of our careers JUST to pay back our debts and survive.
I think that if senior captains in the US are getting £200,000 then I don't see why we should be so different. Put the fares up for gods sake. People WILL still fly.
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Hang on though Invalid Delete- let's put things in perspective. Whilst most people paid for their PPL/CPL, very few will have self financed an unfrozen ATPL; and fewer still will actually have paid for any jet/heavy conversions.
Those costs are all borne by the employer - and as we all know, is generally used as a meal ticket allowing people to move off to greener pastures as soon as they have built up an acceptable number of hours.
Not very fair for the employer who paid two or three times the amount you have getting to where you are, is it?
And of course if you've come from the military, you can increase that number many times over! :wow:
:wow:
Now, let's look at the pay. You suggest that pay levels should be GBP4285 per month - over GBP50k per annum; and more than double the average national salary.
Surely something wrong there - as according to your figures the overwhelming majority of the UK must be living below (your) poverty line!
Those costs are all borne by the employer - and as we all know, is generally used as a meal ticket allowing people to move off to greener pastures as soon as they have built up an acceptable number of hours.
Not very fair for the employer who paid two or three times the amount you have getting to where you are, is it?
And of course if you've come from the military, you can increase that number many times over! :wow:
:wow:Now, let's look at the pay. You suggest that pay levels should be GBP4285 per month - over GBP50k per annum; and more than double the average national salary.
Surely something wrong there - as according to your figures the overwhelming majority of the UK must be living below (your) poverty line!
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I can't beleive how blinkered some of you guys are. This is my first post and Flying is my chosen career path. Though not becuase of the money!!!!!!
I beleive 100hrs month was what a member posted as the possible working hours for a pilot. I know a Surgeon who went to Oxford and Cambridge, is regarded as possibly one of the next great consultants who earns about the same as a BA FO in their second year of employment and has had to work between 110-120 hours per week. Yes per week!!!.
Obviously we need pilots to fly the planes but they are part of a biiger picture. You need Engineers. If they don't work Airline gets grounded. You need planners If they don't apply for slots No flying.
It is about time some not all pilots within the industry look at the wider picture and don't think they are all something special. There are people out there doing just as important jobs with better qualification who are also constantly under sscrutiny who get paid half as much as a Captain of a major.
I beleive 100hrs month was what a member posted as the possible working hours for a pilot. I know a Surgeon who went to Oxford and Cambridge, is regarded as possibly one of the next great consultants who earns about the same as a BA FO in their second year of employment and has had to work between 110-120 hours per week. Yes per week!!!.
Obviously we need pilots to fly the planes but they are part of a biiger picture. You need Engineers. If they don't work Airline gets grounded. You need planners If they don't apply for slots No flying.
It is about time some not all pilots within the industry look at the wider picture and don't think they are all something special. There are people out there doing just as important jobs with better qualification who are also constantly under sscrutiny who get paid half as much as a Captain of a major.
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Maybe your right, maybe I am ill-informed. But from someone who's not an economist I fail to see how, if these companies are making a loss, they can afford to give payrises in the region of 45%. Ok I'll accept this starts as a negotiation tool...but even so! To me that equals bust! Even if it is the bean counters fault in regards to bad management.
Beau Lux...
Of course airlines need pilots. But take away your engineers, flightplanners, Ops staff and the like, and see how far you manage to get your pointy tube then. Before you get up your own arse remember that when UAV's are the norm, we'll still be needed and you won't.
Beau Lux...
Of course airlines need pilots. But take away your engineers, flightplanners, Ops staff and the like, and see how far you manage to get your pointy tube then. Before you get up your own arse remember that when UAV's are the norm, we'll still be needed and you won't.